CBO says healthcare ruling could save $84 billion

WASHINGTON (Reuters) - Last month's Supreme Court ruling that upheld President Barack Obama's 2010 healthcare law could save the U.S. government some $84 billion over 11 years, the non-partisan Congressional Budget Office said on Tuesday.

The savings would come primarily from a portion of the ruling giving the states an escape hatch from the law's expanded program of healthcare coverage for the poor. That expansion of the Medicaid program would be funded mostly by the federal government, but eventually states would have to pick up a portion of that cost.

The CBO also estimated that 3 million uninsured people who would have received Medicaid coverage under the law before the ruling now will remain with no insurance. The law, considered Obama's signature domestic policy achievement, aimed to extend medical coverage to more than 30 million uninsured Americans.

The United States pays more for healthcare than any other country, but about 50 million of the roughly 310 million Americans still have no insurance at all.

A number of states have balked at the law's Medicaid expansion requirements, and any that decide to limit their coverage or opt out would get less federal money and see their rates of uninsured rise.

The CBO estimated that about 6 million fewer people than anticipated will be covered by Medicaid as a result of states that opt out, lowering the overall cost to the federal government.

Some of those people - about 3 million, according to the CBO - will end up purchasing insurance on state health insurance exchanges due to be established by 2014 under the law. The rest will go without health insurance, according to the CBO.

Those who purchase health insurance plans on the exchanges would be eligible for federal subsidies, and that would increase the government's costs. But the CBO said the Medicaid savings would be greater than the added cost of covering people through plans offered on the insurance exchanges.

The CBO also said that repealing the healthcare law - a move advocated by Republicans - would increase the deficit over the next decade by $109 billion. The law's revenue increases and spending cuts total more than the cost of expanding coverage to the uninsured, the CBO said.

The latest measure of the healthcare law's cost may add fuel to the debate over its merits ahead of the November 6 presidential election.

Senate Majority Leader Harry Reid said the CBO report will help Democrats highlight benefits of a law that Republicans say is costly and is discouraging employers from hiring.

"This confirms what we've been saying all along - the Affordable Care Act saves lots of money," Reid told reporters.

The congressional budget analysts estimated that the net cost of expanding medical coverage under the law will total $1.168 trillion over the next 10 years, compared to an earlier estimate of $1.252 trillion.

In its ruling last month, the Supreme Court upheld the constitutionality of the so-called individual mandate, requiring Americans to obtain health insurance by 2014 or face a tax penalty.

But the court said the federal government could not compel states to expand their existing Medicaid programs by threatening to disqualify them entirely from the costly coverage. The CBO said its latest estimate reflects the belief that some states will limit their expansion of Medicaid.